Rendell: Shale Tax Off The Table (For Now).

There's One Less Tax On The Negotiating Table.
At a news conference this afternoon, Gov. Ed said he's dropping efforts to pursue a roughly $100 million "severance tax" on the natural gas extracted from the so-called "Marcellus Shale" deposits in rural Pennsylvania.

At a mid-afternoon news conference, the Democratic governor left open the possibility of pursuing the tax as soon as next year. But he said any new levy would be pursued in consultation with the natural gas industry.

"I think all involved, Democrat and Republican alike, believe that we should eventually have a severance tax," Rendell told reporters. "But not at the beginning. We want to work with people investing in Pennsylvania to get their input."

Asked when the state might have a severance tax on the books, Rendell said "fairly quickly but not this year."

Jan Jarrett, the executive director of the eco-group PennFuture, was less than thrilled by the governor's decision.

"From January to the end of June, the industry spent $1 million lobbying the state Legislature," Jarrett said. "It looks like it worked. Everyone's swallowed the industry line that it needs to be coddled."

House Democrats weren't toeing the administration's line this afternoon.

"We believe all revenue options should be in the mix," said Brett Marcy, a spokesman for House Majority Leader Todd Eachus, D-Luzerne. Marcy conceded that the state probably wouldn't see much money from a severance levy this year. But he argued the it would see major bucks over the next few years.

"We believe it makes sense for big oil and big natural gas to pay their fair share," said Marcy, whose boss, along with House Speaker Keith McCall, D-Carbon, represent voters deep in the heart of shale country.

Erik Arneson, a spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware, meanwhile, credited Rendell for coming around to the GOP's way of thinking on the extraction tax.

"A Marcellus Shale tax, at this time, does not make sense," he said.

The governor's comments about the extraction levy came on the eve of the first meeting of the first meeting in weeks of a joint House and Senate negotiating committee that's been struggling to reach an agreement on a state budget for 2009-2010.

Budgetless since July 1, Pennsylvania is just one of two states that do not have an approved spending plan for the fiscal year that started on July 1.

Rendell said he hopes the 6-member committee will move past the partisan squabbling for which it was roundly criticized earlier this summer and reach a compromise by "the end of next week," with a budget vote to follow in mid-September.

"It's Labor Day and the people of Pennsylvania expect us to labor," he said. Rendell also repeated a familiar call for majority Senate Republicans to meet Democratic compromises on the roughly $28 billion spending plan.

"The Senate Republicans will not get this budget resolved without doing things they don't necessarily don't want to do. That's the nature of compromise," he said.

Arneson said the GOP has compromised by raising its bottom line budget proposal from $27.1 billion to $27.5 billion, and now is willing to consider tapping the state's Rainy Day Fund. The Senate GOP also would support legalizing table games to raise money, as long as lawmakers approve a package of reforms to the 2004 slots law.

"Any objective look shows that both sides have made concessions and stood on principle when it's important," Arneson said, adding that his boss is deeply pessmistic that the Tuesday session will lead to a breakthrough.

Rendell was, by turns, wistful and philosophical during the brief session with Capitol journalists. Republicans and Democrats are roughly $500 million apart on the budget's bottom line, but disagree violently on the question of tax hikes.

"This should be easy," Rendell said at one point, referring to "reasonable" requests by Republicans and Democrats to both constrain spending and stable ensure funding for key, social welfare programs.

"I'm incredibly frustrated," Rendell said. "I sit over there at the Governor's Residence, and it's not a bad place to sit, and I go over the same figures over and over again If they put everything aside, this should be an easy stretch."

Rendell conceded that his ploy to blue-line funding to social service agencies from an $11 billion "bridge budget" he signed earlier this month had not worked. And asked whether he'd made a tactical mistake by targeting those groups in the hopes of ratcheting up pressure on lawmakers, he shrugged and said, with visible frustration:

"I don't know if that pressure was there to begin with," he said. "The Republicans were successful on pinning all that on me."

Current Comments

Clean Water Action hasn't raised any money on Marcellus Tax issues, but we're incredibly frustrated by this.
It's so silly: this isn't a "new" industry. Moving rigs around to new drill sites is what this industry does. Just because they show up on a hunk of land with a different name at the bottom of the address box does not make it a "new" industry.
These folks have been working in Texas, Colorado and Wyoming for years now. They have their operations down. Coming to Pennsylvania is just one more shift in land.
What you DO miss out on by not laying the tax down early is the most productive period of production for the wells. They shoot out the most gas at first and then it tapers off fast.
This is so frustrating. We're the only state without this kind of tax. There is absolutely no way a tax would slow this industry down. We have the biggest shale play in the country (probably, the world), and its close to the largest market for natural gas in the country, the high density, very cold Northeast.
This is just silliness.
WAY TO GO EACHUS, GEORGE & MCCALL! Stay on it!

Economics at work. Dont bite the hand that feeds you...and the local economies.

Natural gas companies will create and have already created a ton of high paying jobs. The state income tax on the huge dollar amounts that have been paid to land owners will also be seen this year. Royalty incomes will also increase the number of dollars coming into the state bankroll.

The high paying jobs have a trickledown effect as well, in that the people who work on those rigs will eat lunch in town supporting restaurants, buy gas for their vehichles in town supporting mom and pop gas stations, rent houses supporting rental property owners...etc etc etc... And when I hear about the destruction of roads as a result of trucks... well that means more jobs for people who pave roads... and that money will come from the income taxes and revenue that the state will receive from the development of the natural gas resources underfoot.

Let free markets rule and the world is a better place. Regulate the hell out of everything and tax the hell out of everything and no-one has any money to buy anything to support the local economies. It's about time Rendell put a stop to the non-sense and let this industry get it's feet on the ground to start running.

The luddites who fear progress need to recognize that the civilization has developed by energy and without energy there is no civilization. The resource under Penn alone can free the entire US from energy dependence. As a nation, we must Change. And Natural Gas from PA can lead the way.

Posted By: About time | Sep 1, 2009 10:52:37 AM

Let's see - according to news reports, Pennfuture lobbied for an alternative energy package last year, and then received a $140,000 no-bid WAM from Governor Rendell.

Contingency lobbying at its best.

Guess Pennfuture won't be getting a bonus this time around. No wonder Ms. Jarrett is so put off that her lobbying efforts for a severance tax have failed.

Posted By: Truthforachange | Aug 31, 2009 10:48:01 PM

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